Bell v. Koss

Background

This breach-of-contract action had been stayed since May 4, 2018, while Defendant Exotic Euro Cars’ bankruptcy proceeding remained pending. The court had required counsel for Exotic Euro Cars to file status letters every 60 days. Counsel later moved to withdraw and had also represented Defendants Kain Kumar and Sharmini Kumar. Judge Freeman granted the withdrawal motion on July 18, 2019, warned Exotic Euro Cars that a corporation cannot appear without counsel, and directed the individual defendants either to retain new counsel or proceed without a lawyer and provide their contact information to the Pro Se Office.

The defendants did not file the required status letters by the deadlines in September, October, or December 2019, and they did not inform the court that they had retained counsel or provide the required contact information. Bell filed status letters stating that the bankruptcy proceeding was still underway and asked for permission to seek an order lifting the stay.

Request to Lift the Stay

The court denied Bell’s request for permission to move to lift the stay. It ruled that the claims against the individual defendants could not be resolved without involving Exotic Euro Cars, and that involving Exotic Euro Cars would violate the automatic stay imposed by 11 U.S.C. § 362(a). The court also stated that an application to terminate, modify, or lift the automatic stay must be made to the bankruptcy court supervising the bankruptcy proceeding, not to this court.

Orders and Warnings

The court ordered Exotic Euro Cars to retain new counsel by January 6, 2020 and required counsel to enter an appearance by that date. If it failed to do so, the court would enter an order finding that it had willfully defaulted. After the bankruptcy stay ended, the court could enter a default judgment against Exotic Euro Cars based on that finding and could impose additional sanctions.

The court likewise ordered Kain Kumar and Sharmini Kumar by January 6, 2020 either to retain new counsel or provide their contact information to the Pro Se Office. If neither counsel entered an appearance nor the individuals provided their contact information, the court would enter an order finding that each had willfully defaulted. After the stay ended, the court could enter default judgments against them and impose additional sanctions.

The court also required Exotic Euro Cars to file a bankruptcy-status letter on January 6, 2020. Kumar and Sharmini Kumar were required to file their own joint status letter, whether or not Exotic Euro Cars filed one. Bell was separately required to file a status letter on that date regardless of whether the defendants complied. The order explained that failure to prosecute the case diligently or obey court orders could result in default judgments or other sanctions, but stated that it was not deciding whether the defendants’ prior failures alone already justified such sanctions.

Disposition

Judge Analisa Torres denied Bell’s request for leave to move for relief from the automatic stay and issued case-management orders and warnings. The order did not enter a default judgment, impose sanctions, lift the stay, or decide the underlying contract claims. The clerk was directed to mail the order to Bell, Exotic Euro Cars, Kain Kumar, Sharmini Kumar, and counsel involved in Exotic Euro Cars’ bankruptcy proceeding.